MOSCOW - Russian metals producer Nornickel, said on Friday that the financial stability of the company was more important then dividends but shareholders had the final say on the matter.

Dividends are a sensitive subject for Nornickel, the world's largest palladium producer and a major producer of high-grade nickel.

Disagreements on the issue have for years been the main reason for on-and-off rows between its main owners, chief executive and largest shareholder Vladimir Potanin and aluminium producer Rusal.

Nornickel failed to pay dividends on its 2022 results for the first time in 14 years, citing "negative geopolitics". But the company resumed payouts for the first nine months of 2023 and paid to shareholders $1.5-billion in January.

Nornickel's 2023 net profit and revenue declined due to low metal prices.

A tax increase in Russia, geopolitical risks and western sanctions on Russia in response to the conflict in Ukraine had constrained company's development, though the sanctions have not targeted the Nornickel directly, said Vladimir Zhukov, vice president for investor relations.

"We continue to fulfill our investment obligations, environmental obligations, social obligations, whose cost is very significant," Zhukov said.

"Our point of view as management: maintaining financial sustainability in the current conditions is an undoubted priority. But the decision is up to the shareholders", Zhukov said about the possibility of dividend payments.

The company had free cash flow of $2.7-billion in 2023, which once adjusted for debt servicing and other factors would leave only $1.4-billion for possible dividends, exceeding its January interim payments, Nornickel reported last month.

The expiration of a decade-old shareholder agreement protecting Nornickel's dividend payouts at the end of 2022 left the company's future dividend strategy hanging in the balance. A dispute over the 2012 agreement led Rusal to file a lawsuit against Potanin in London in October 2022.

Potanin holds a 37% stake in it, while Rusal holds 26.4% and former Chelsea Football Club owner Roman Abramovich has a 4% stake.